House Approves Tax Extenders Bill

Filed in Capitol Hill by on December 4, 2014 1 Comment
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99743632By a wide bipartisan 378-46 margin, the House last night approved H.R. 5771, the Tax Increase Prevention Act, which will renew scores of temporary tax provisions known as “tax extenders” that expired this year, including several of interest to the housing community. The one-year retroactive renewal is through 2014 and dates back to Jan. 1.

NAHB is disappointed that a longer term deal was not reached, but the political situation and the calendar have forced Congress into a one-year deal everyone hoped to avoid.

Just one week ago, Congress was headed to a bipartisan, bicameral deal which would have extended all of the expired provisions for two years through 2015. The agreement also would have also made a handful of extenders, such as the research and development tax credit, permanent.

Just hours after word of the agreement leaked out, the White House scuttled the deal by announcing the President would veto any bill that contained these permanent provisions.

In a letter to the House prior to the bill’s passage, NAHB urged lawmakers to support the legislation. We also expressed concern that these short-term tax bills create difficulties for our members by denying builders the certainty needed to finance complex projects and called on Congress to act quickly on a longer-term deal in early 2015

Key provisions in the tax extenders package for 2014 (retroactive to Jan. 1) include:

  • Section 45L Tax Credit for Energy Efficient New Homes. Provides builders a $2,000 tax credit for exceeding energy standards by 50%. The base energy code is the 2006 International Energy Conservation Code plus supplements. Section 45L is expected to save home builders $267 million in taxes for 2014 construction activity.
  • Fixed Credit Rate for 9% Low Income Housing Tax Credit projects. The bill will renew the 9% fixed rate, but only for 2014 allocations.
  • Section 25C Tax Credit for Qualified Energy Efficiency Improvements. This is a credit worth up to $500 (subject to a $500 lifetime cap), with lower caps for certain products like windows, for consumers to install qualified energy efficient upgrades. Remodelers often leverage 25C tax credits when working with clients. Section 25C is expected to save home owners who remodel $832 million in taxes for 2014 improvements.
  • Section 179D Energy Efficient Commercial Buildings Deduction. Provides a deduction up to $1.80 per square foot for commercial buildings, including multifamily buildings built under the commercial code, that exceed specific energy efficiency minimums.
  • Section 163 Deduction for Mortgage Insurance. Allows taxpayers, subject to an income cap, to deduct premiums paid for private mortgage insurance and FHA/RHA/VA insurance premiums. The deduction for mortgage insurance is expected to save home owners $919 million for tax year 2014.
  • Bonus Depreciation. Extends the 50% bonus depreciation.
  • Section 179 Expensing. Increases the maximum expensing amount to $500,000 for qualified property on up to $2 million in property placed in service.
  • Mortgage forgiveness tax relief. The provision would eliminate any taxes home owners might face from banks renegotiating the terms of a home loan and forgive a portion of the outstanding mortgage. This would apply only to principal residences and through the 2014 calendar year.

The Senate approved H.R. 5771 on Dec. 16.

This post was updated on Dec. 17 to reflect Senate passage of H.R. 5771.

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  1. Please promote an alert to notify all Members and Assoc Members to contact all Democratic Senators to support passage of this Legislation.

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